Sovereign Wealth Fund

The concept of the United States establishing a sovereign wealth fund (SWF) backed by Bitcoin has garnered significant attention, especially following President Donald Trump’s executive order directing the creation of the nation’s first SWF in the form of a Bitcoin reserve. Traditionally, SWFs are state-owned investment funds designed to manage national savings, often derived from surplus revenues generated by natural resource exports or trade surpluses. Countries like Norway, whose Government Pension Fund Global is funded by oil revenues, and Singapore, through its foreign reserves and state investments, exemplify a standard for SWFs that pursue long-term financial stability and intergenerational wealth preservation.

Examples of Reserves

Historically, SWFs have been backed by tangible assets such as oil, gas, or foreign exchange reserves. China’s Investment Corporation, for instance, manages over $1 trillion, leveraging the country’s trade surplus and foreign currency reserves to invest in diverse global markets. The United Arab Emirates’ Abu Dhabi Investment Authority, built on the nation’s oil wealth, has successfully invested in various asset classes including real estate, equities, and infrastructure. Similarly, Australia’s Future Fund, designed to meet public sector liabilities, and Qatar’s Investment Authority, which helps diversify the economy away from hydrocarbons, illustrate how SWFs have been empirically set up to manage wealth generated from stable and substantial national resources.

In contrast, the U.S. proposal for a Bitcoin-backed SWF presents a departure from these traditional models. Unlike commodity-based SWFs, a U.S. Bitcoin reserve would rely on a volatile digital asset without the backing of physical resources or consistent surplus revenues. While supporters argue that Bitcoin’s decentralized nature and growth potential could hedge against inflation and economic uncertainty, the absence of a clear regulatory framework coupled with market volatility pose risks not typically associated with established SWFs.  

United States Legislation

At the state level, there is a growing movement toward incorporating digital assets into public reserves. As of February 2025, 20 U.S. states have introduced legislation to establish Bitcoin reserves. North Carolina recently became the 20th state to propose such a measure, allowing the state treasurer to invest in cryptocurrencies with a market capitalization exceeding $750 billion. Similarly, Utah, Arizona, and Illinois have proposed bills permitting the investment of up to 10% of public funds in digital assets. 

While state-level actions indicate a growing acceptance of digital assets, the federal government must carefully consider the risks and implications of such a fund. The experiences of nations with established SWFs, grounded in stable financial resources and long-term strategies, highlight the complexities and challenges the U.S. would face in attempting to establish a Bitcoin-backed SWF within its current economic landscape. That’s not to say that other SWF are immune to the fluctuations of the market or exist without risk, but the success of a Bitcoin SWF will be tied to the strength of a regulatory framework that has yet to exist.